Krugman: The Jobs Deficit (defining what good news would look like)

[Kurt_and_Hunter]

Paul Krugman December 10, 2009

The jobs deficit

It was truly amazing the way last week’s employment report was hailed by many people as a sign that our troubles are over. Here we are, having suffered huge job losses, and needing to make up the lost ground — and a report showing that we’re still losing jobs, but not as fast, is grounds for celebration?

Anyway, I thought it might be useful to create a sort of benchmark for the level of job growth that would really count as good news. I start from the fact that we’ve lost about 8 million jobs since the recession began — that’s the official number plus the preliminary estimate of the coming benchmark revision. I then take EPI’s estimate that we need to add 127,000 jobs a month. EPI points out that when you put these numbers together, they say that to return to pre-crisis unemployment within two years we’d have to add 580,000 jobs a month. That’s not going to happen.

But let’s set a more modest goal: return to more or less full employment in 5 years –which means seven lean years of depressed employment. To keep up with population growth over those 7 years, the United States would have had to add 84 times 127,000 or 10.668 million jobs. (If that sounds high, bear in mind that we added more than 20 million jobs over the 8 Clinton years). Add in the need to make up lost ground, and we’re at around 18 million jobs over the next five years — or 300,000 a month.

So that’s a useful benchmark. Even if we add 300,000 jobs a month, we’re looking at a prolonged period of suffering — a huge cost from the Great Recession. So that’s kind of a minimal definition of success. Anything less than that, and it’s bad news. It sort of puts that wonderful report that we only lost 11,000 jobs in perspective, doesn’t it?

http://krugman.blogs.nytimes.com/2009/12/10/the-jobs-deficit/

[HughMoran]

1. I guess we were supposed to go from losing to +300,000 instantly?

I'm not sure who said "our troubles are over" - but unless it was several people in the Administration, that seems to be a bit of an exaggeration. Krugman can be a bit over the top with his rhetoric at times. Thanks for bringing us back to reality Paul - we were all but partying in the streets :eyes:

[Kurt_and_Hunter]

2. He doesn't say anything like that, but whatever

[HughMoran]

3. "last week’s employment report was hailed by many people as a sign that our troubles are over"

The jobs deficit

It was truly amazing the way last week’s employment report was hailed by many people as a sign that our troubles are over. Here we are, having suffered huge job losses, and needing to make up the lost ground — and a report showing that we’re still losing jobs, but not as fast, is grounds for celebration?

Anyway, I thought it might be useful to create a sort of benchmark for the level of job growth that would really count as good news. (my comment - so this isn't to be perceived as snarky?) I start from the fact that we’ve lost about 8 million jobs since the recession began — that’s the official number plus the preliminary estimate of the coming benchmark revision. I then take EPI’s estimate that we need to add 127,000 jobs a month. EPI points out that when you put these numbers together, they say that to return to pre-crisis unemployment within two years we’d have to add 580,000 jobs a month. That’s not going to happen.

But let’s set a more modest goal: return to more or less full employment in 5 years –which means seven lean years of depressed employment. To keep up with population growth over those 7 years, the United States would have had to add 84 times 127,000 or 10.668 million jobs. (If that sounds high, bear in mind that we added more than 20 million jobs over the 8 Clinton years). Add in the need to make up lost ground, and we’re at around 18 million jobs over the next five years — or 300,000 a month.

So that’s a useful benchmark. Even if we add 300,000 jobs a month, we’re looking at a prolonged period of suffering — a huge cost from the Great Recession. So that’s kind of a minimal definition of success. Anything less than that, and it’s bad news. It sort of puts that wonderful report that we only lost 11,000 jobs in perspective, doesn’t it? - UMM SNARKASM!!!

_____________________________________________________________

I think I read it correctly...

[Kurt_and_Hunter]

4. Where did he say we were supposed to go from losing to +300,000 instantly?

The jobs report was, in fact, the source of considerable enthusiasm, including in this forum.

That enthusiasm was largely un-tempered by the reality of what was being celebrated.

Krugman does not say that we can go from negative to +300,000 instantly. And he does not say that the jobs report was, in and of itself, bad news.

He is saying that even if we could somehow magically go to +300,000 instantly (which we obviously cannot) that we would STILL be facing year after year of serious underemployment.

"So that’s a useful benchmark. Even if we add 300,000 jobs a month, we’re looking at a prolonged period of suffering — a huge cost from the Great Recession."

The point of the piece is the opposite of your straw-man characterization of it. Nowhere in the piece does Krugman make unreasonable demands or express unreasonable expectations.

[dmallind]

8. And the enthusiasm was for signs of a reversal, not for troubles being over

It's strange that nobody seems to be able to accept that a slowdown in pain is a good thing, and does not mean at all that there is no more pain.

The US labor market from 08 to mid/late 09 was the equivalent of an elite athlete with multiple compoound fractures on both legs. Losing ground fast, in terrible pain, and unable to even rest comfortably.

What we are seeing as good news in late 09 is that the bones are reset and the casts are on (stimulus, GDP growth, manufacturing demand). He's still in great pain, but he's stabilized, and can start healing in a way that would have been impossible without the attention. That is a GOOD thing. We certainly should realize he's better off now and we can celebrate that.

What Krugman is talking about is perfectly correct, but is the equivalent of the long arduous rehab regimen he needs to go through to get back to sub-10 100meter runs. Definitely necessary, and a good thing. Definitely a long process, but premature at this point. Nothing wrong with saying we should celebrate that his bones are back under his skin before we worry about physical therapy and muscle strengthening to come.

[Vinnie From Indy]

5. That's not the most terrifying aspect of what Krugman is implying

The fact is that we could easily the reverse of the positive trend and head back towards larger and larger numbers of Americans losing jobs. While it is not certain, it is entirely possible that America has entered into a paradigm shift brought on by globalization, free trade and emerging markets. If that is true, this Great Recession is not solely a cyclical occurrence. Without a fundamental shift in the way Washington operates, this could all just be the start of our pain. At what point do we reallocate the trillions of dollars being spent on war and to insure the bad bets of the ultra-wealthy? It is my fear that, as with global warming, that by the time the situation gets bad enough for reality to set in for average Americans, the game will have been long over.

[Teaser]

6. There is never any good news

no matter what.

[high density]

7. I think the person Krugman is debating against in this post doesn't exist

The fact remains that -11,000 jobs is better than -600,000. We are also aware that job growth did not keep up with population growth during the Bush years. So given Bush's horrible record, plus the continued losses this year, I think we all know that we have a very long way to go before we're anywhere close to where we were a decade ago in regards to jobs. Krugman's Debbie Downer post is rather patronizing.

[RedEarth]

9. Interesting.... thanks for posting

[mkultra]

10. This kind of report is valuless

Wether we have a long road to go or not, the reversal of the loss trend is a good thing. If Clinton can add 20 million jobs in 8 years after Reagan then its plausible that Obama can do it after shrub.